We need inflation, not deflation

Price cap: The recent announcement to cap fuel prices for RON95 at RM2.08 per litre will likely keep the rate of change in inflation for the rest of the year at a lower level for a while.

DEFLATION is defined as the general decrease in price of goods and services in an economy and it occurs when the inflation rate, i.e. the rate of change in the inflation index, has turned negative.

According to the Department of Statistics (DoS), the January 2019 Consumer Price Index (CPI) stood at 120.5 points against 121.3 points in the same month a year ago, a decline of 0.7%. Against the December 2018 reading of 121.1 points, the January index level meant that Malaysia also experienced a fall in the CPI of 0.5% on m-o-m basis. Hence, for the first time since November 2009, Malaysia experienced deflation.